Officials of Municipalities with Electric Systems and Their Independent Auditors

Transcription

1 NORTH CAROLINA DEPARTMENT OF STATE TREASURER STATE AND LOCAL GOVERNMENT FINANCE DIVISION AND THE LOCAL GOVERNMENT COMMISSION JANET COWELL TREASURER T. VANCE HOLLOMAN DEPUTY TREASURER Memorandum # TO: FROM: SUBJECT: Officials of Municipalities with Electric Systems and Their Independent Auditors Sharon Edmundson, Director, Fiscal Management Section Statistical Information on Electric System Operations DATE: April 29, 2010 This publication has been prepared to enable local officials to compare their locality's electric system operations with the operations of other similar municipalities with electric systems. Local officials are encouraged to compare their own performances to similar units and to statewide averages. Such comparisons may identify opportunities for improvement or may indicate improved performances from previous fiscal years. Key items are provided to indicate the comprehensive financial condition of each electric system. To facilitate the analysis of these key items, this report is segregated into the following four tables: Table A - Table B - Table C - Table D - Financial Results and Key Ratios of Municipal Electric Systems. This table summarizes the financial results of each municipal electric system for the last four fiscal years and includes key financial ratios. Analysis of Transfers to the General Fund by Municipal Electric Systems and Effects on Property Taxes. This table includes statistics for the last four fiscal years on the extent to which Electric Fund transfers have been used to subsidize the General Fund and the effects of transfers and the unit s ownership of the electric system on the tax rate. Ten Years of Comparative Data on Electric Fund Transfers as a Percentage of General Fund Revenues. This table presents ten years of comparative data to highlight the extent to which Electric Fund transfers have been used to subsidize the General Fund. Analysis of Capital Outlay Expenditures of Municipal Electric Systems. This table includes an analysis of capital outlay expenditures of each municipal electric system for the last five fiscal years, which should assist units in determining if they are adequately funding the maintenance and/or expansion of their electric systems. To facilitate the analysis of this information and to give an indication of how the statistics in this report are distributed, a statistical analysis is included, which shows the minimum, maximum, mean, median, and standard deviation of key items. For the statistical information in this report to be meaningful, financial reporting between local governments must be consistent. We are 325 NORTH SALISBURY STREET, RALEIGH, NORTH CAROLINA Courier # Telephone (919) Fax (919) Physical Address: 4505 Fair Meadow Lane, Blue Ridge Plaza, Suite 102, Raleigh, NC Website:

2 Memorandum # Statistical Information on Electric System Operations April 29, 2010 Page 2 concerned that some local governments may not be using appropriate financial reporting practices in two areas: potential accrual of unbilled electric services, accounting for reimbursements, and quasi-external transactions. Accrual of Unbilled Electric Services Since the Electric Fund operates in a manner similar to a commercial business, it should generally follow financial reporting standards similar to commercial organizations. These standards require that the full accrual basis of accounting be used and that revenues be recorded when they are measurable and earned. In the Electric Fund, revenues and receivables should be accrued at the end of each month for electric services provided to customers even if the customers have not yet been billed. If a municipality has provided services to its customers, it has earned the revenues for these services and should record a revenue and receivable. The failure to record such unbilled receivables results in a potential misstatement of the Electric Fund financial statements because expenses that have been incurred are recognized while the related revenues and receivables are not recognized. Accounting for Reimbursements and Quasi-External Transactions If the General Fund provides administrative services for the Electric Fund, payments for these shared services should be allocated correctly between the two funds. These payments should not be accounted for or reported as transfers. The appropriate accounting treatment involves recording expenditures or expenses in the reimbursing fund (i.e., Electric Fund) and reductions of expenditures or expenses in the fund that is reimbursed (i.e., General Fund). The failure to properly record reimbursements understates the costs of operations in the Electric Fund. In addition, it overstates expenditures in the General Fund, which causes fund balances available for appropriation as a percentage of expenditures to be understated. Incorrectly reporting these reimbursements as transfers to the General Fund also overstates the level of transfers between funds. Transactions that would be treated as revenues, expenditures, or expenses if they involved organizations external to the municipality, such as certain payments in lieu of taxes (PILOT) from the Electric Fund to the General Fund or sales of electricity to other funds of the municipality should be accounted for as revenues, expenditures, or expenses in the funds involved. Units that have adopted transfer policies often base payments in lieu of taxes upon the gross value of fixed assets and the tax rate of the unit. These PILOTs should be treated as transfers but should be segregated from other operating transfers out from the Electric Fund. The municipal use of electricity for street lighting should be recorded as operating revenues in the Electric Fund and as expenditures in the General Fund. In addition, a similar entry should be made for the use of electricity by a Water and Sewer Fund. For further information on this subject, see Memorandum #814, Issues of Concern for the Fiscal Year and Future Years. Municipalities that are members of the N.C. Eastern Municipal Power Agency and N.C. Municipal Power Agency No. 1 have adopted transfer policies that limit the amount of transfers that can be made from the Electric Fund to the General Fund, authorize payments in lieu of taxes by the Electric Fund and authorize transfers to an electric rate stabilization fund. Inappropriate reporting of reimbursements, transfers and quasi-external transactions between funds may cause management, citizens and other financial statement users to reach incorrect conclusions about the unit s compliance with its transfer policy.

3 Memorandum # Statistical Information on Electric System Operations April 29, 2010 Page 3 Since these amounts are material to the financial statements, auditors should be cognizant of these issues when conducting audits of municipalities that operate electric systems. In addition to being alert to possible misclassification of transactions, the auditor should determine that reimbursements are based upon costs and a reasonable allocation of expenses. Each year our staff reviews the reports of municipalities that are members of the power agencies to determine that each unit is in compliance with its transfer policy. During our review of those reports, we found that some units are transferring money from the Electric Fund to a fund other than the General Fund. These transfers are not addressed in the transfer policy. The staff will consider these transfers as they review the financial practices of the unit for determining if approval of a debt issue can be recommended to the Local Government Commission. Transfers made to other funds that will provide a long-term economic benefit to the unit will not negatively impact that review. If a unit transfers money to a fund and that fund transfers money to the General Fund, we will consider the transfer as having been made directly to the General Fund for determining compliance with the transfer policy. Under GASB Statement 34 payments in lieu of taxes that are based on the tax rate of the unit are now accounted as transfers. These payments are not to be counted in applying the transfer policy. How to Interpret Figures in this Report In analyzing the statistics in this memorandum, the amounts for a particular unit should be compared to similar units, to statewide averages, and to national performance indicators published by organizations such as the credit rating agencies. In addition, the mean and standard deviation statistics should be analyzed to determine if the amounts for a unit are significantly above or below the amounts reported by other units. The amounts reported for a unit may be significantly out of line if they are more than one standard deviation above or below the mean. If an amount is determined to be significantly out of line, the reasons for the variance should be investigated. However a significant deviation from the mean is not necessarily an indication of a financial weakness, but instead may be an indication of a significant event having taken place, such as an expansion of the electric system or the occurrence of abnormal weather. It should be noted that even though there may be variations from one unit to another in some of the accounting policies used to arrive at the figures presented in this report, the effects of such variations should not materially affect the overall comparability of these statistics. In analyzing the attached tables, the following items should be considered: Table A - Financial Results and Key Ratios of Municipal Electric Systems (Note: See Key to Financial Statistics and Ratios at the end of this table.) Financial Results a. Electric power purchases and other operating expenses. Units should be working to control expenses in the Electric Fund, particularly within the category Other Operating Expenses, which is the major expense area within a unit s control. Although the largest operating expense item is "Electric Power Purchases", this amount is not entirely within a unit's control since the wholesale rates are set by the power agency. If the percentage of electric power purchases is significantly above other units, it may be that cost increases imposed by the power agency have not been passed on to customers but instead have been absorbed by the Electric Fund, or possibly that an effective load management system has not been implemented. Because of the changes in the utility industry, units may be forced to absorb future cost increases to remain competitive with investor-owned utilities. According to the U.S. Department of Energy s (DOE) compilation of Form EIA-412 Annual Report of Public Electric Utilities (the last year of

4 Memorandum # Statistical Information on Electric System Operations April 29, 2010 Page 4 the report is 2003 as it was terminated thereafter), the mean percentage of operating revenues for electric power purchases for major publicly owned non-generator electric utilities was 71.2% in The mean percentage for other operating expenses for this group was 21.0% in b. Operating margin. This ratio is an indicator of the profitability of the electric operating activities. If a unit s operating margin is significantly below the amounts for other similar units, it may be an indication that user fees are too low or that operating expenses are too high. In the U.S. DOE s compilation of Form EIA-412 Annual Report of Public Electric Utilities, the mean operating margin for major publicly owned non-generator electric utilities was 7.8% in c. Transfers out (in). This ratio shows the net transfers made to (from) all other funds of the municipality. A positive ratio gives an indication of the extent to which the Electric Fund is being used to subsidize other funds. A negative ratio gives an indication of the extent to which the Electric Fund is being subsidized by other funds. As a goal, units should only make transfers to other funds if they have met their working capital needs and if they have sufficient reserves for rate stabilization purposes and capital outlays. d. Net income before capital contributions. This ratio is an indicator of the overall profitability of the electric system after payments are made for interest on long-term debt and miscellaneous expenses. In the U.S. DOE s 2003 compilation of Form EIA-412 Annual Report of Public Electric Utilities, the mean net income as a percentage of operating revenues for major publicly owned non-generator electric utilities was 5.0%. Key Ratios e. Quick ratio. This ratio gives an indication of the Electric Fund s ability to pay its current bills, thereby providing a measure of short-term liquidity. Because the quick ratio is snapshot of a utility s liquidity at a point in time, it may vary considerably throughout the year. A widely accepted minimum benchmark for the ratio of quick assets to current liabilities is 2 to 1; in other words, an electric system should have at least $2 in quick assets for each $1 of current liabilities. A quick ratio that is significantly below this level may be explained in part by excessive transfers being made from the Electric Fund. f. Coverage ratio. This ratio is a measure of the degree of protection creditors have from a default on debt obligations. As the ratio approaches 1 to 1, there is a greater risk that the Electric Fund will not be able to make its debt service payments and power purchases from its current year s cash flows. g. Days sales in receivables. This ratio gives an indication of how quickly payments are being collected. Each unit should have procedures in place to ensure that electric customers are making payments within the prescribed due date. If this ratio is much greater than the maximum number of days allowed before payment is due, the unit may be inefficient in collecting payments from its customers. The inability to convert receivables into cash on a timely basis negatively affects cash flows, and therefore, investment earnings. Situations where the Days Sales in Receivables ratio is significantly lower than the maximum number of days allowed may indicate that units have not accrued unbilled receivables at the end of the fiscal year. (See section on unbilled receivables in Memorandum #814.) h. Days cash on hand. This ratio provides an indication of the adequacy of an electric system s unrestricted cash and investment balances. The Electric Fund needs to maintain adequate cash and investment balances to enable it to finance its operations, respond to changing market

5 Memorandum # Statistical Information on Electric System Operations April 29, 2010 Page 5 conditions, survive a prolonged economic downturn, or to take advantage of strategic opportunities. A unit whose Days Cash on Hand ratio is significantly below the averages presented in this report may find that its cash reserves are inadequate. A below average ratio may be an indication that large transfers have been made to other funds. Also, it may indicate that a rate stabilization fund is not being maintained and/or that sufficient reserves for future capital outlays are not being set aside. Table B- Analysis of Transfers to the General Fund by Municipal Electric Systems and Effects on Property Taxes (Note: See Key to Definitions and Formulas at the end of this table.) i. This table shows the actual transfers from the Electric Fund to the General Fund for the last four years in dollars, as a percentage of Electric Fund Fixed assets, and as a tax rate equivalent. The staff of the Local Government Commission recommends that each power agency participant adopts a transfer policy and that transfers not exceed 3 percent of gross Fixed assets. (See Memo #814 for LGC guidelines on developing a transfer policy.) In situations where a unit s transfers are significantly greater than 3 percent of gross Fixed assets, the unit may face the need for significant increases in property taxes and/or large budget cuts in future years. j. Units with electric systems that are making substantial transfers to the General Fund should determine if their costs of providing general governmental services are in line with the costs incurred by non-electric municipalities of a similar size. To assist in making this determination, Table B includes a computation of what the unit s tax rate would have to be in order for the General Fund to operate without Electric Fund transfers. Also, this table presents the corresponding average tax rate for non-electric municipalities of a similar size. The tax rates presented in the last three columns of this table have been adjusted by multiplying the tax rate by the assessment-to-sales ratio of the county in which a unit is located. (Note: An assessment-tosales ratio is calculated annually for each county by the N.C. Department of Revenue. This ratio is based on a sample of selected real estate transactions within a county and equals the assessed valuation divided by the actual sales price. At the beginning of a revaluation cycle, market values and assessed values for a unit are approximately the same. However, by the end of a revaluation cycle, assessed values are usually much lower than market values. This adjustment makes tax rates between units more comparable, given that units are at different points in their revaluation cycles.) If a unit s tax rate without Electric Fund transfers is significantly above the non-electric average, then the unit may be providing an above average level of general governmental services, incurring higher costs to provide a basic level of general governmental services, or may not be fully utilizing all available General Fund revenue sources. The electric fund transfers as tax rate equivalent and the tax rate without Electric Fund transfers could be overstated as a result of the unit using transfers to reimburse the General Fund for administrative services rather than using the proper accounting for reimbursements. (See Accounting for Reimbursements and Quasi- External Transactions above.) The local governing board and management team should immediately investigate the cause of any significant tax rate variations from comparable nonelectric municipalities k. The first part of this table presents statistics on the gross fixed assets of the Electric Fund and the estimated loss in property tax revenues that results from the unit s ownership of the utility. Local officials can use this information in estimating a payment-in-lieu of taxes amount from the Electric Fund to the General Fund. However, this estimate would normally exceed the amount of property taxes that would have been paid by an investor-owned utility since the N.C. Department of Revenue reduces the cost amounts of utility assets in calculating the assessed values subject to taxation. This reduction is determined according to complex guidelines specified in the General

6 Memorandum # Statistical Information on Electric System Operations April 29, 2010 Page 6 Statutes. In addition, the gross fixed assets amount used in this calculation was not reduced for Electric Fund Fixed assets located outside the unit s corporate boundaries. Table C - Ten Years of Comparative Data on Electric Fund Transfers as a Percentage of General Fund Revenues l. Units making large transfers from the Electric Fund to the General Fund should be looking for ways to reduce the level of transfers made each year. This memorandum includes an analysis of transfers made over the last ten fiscal years, which can be used to determine if the General Fund has been reducing its reliance on Electric Fund transfers. Table D - Analysis of Capital Outlay Expenditures of Municipal Electric Systems This table shows capital outlays made in each of the last five fiscal years. Units should continue to make capital improvements to their electric systems and are encouraged to utilize sound management practices by adopting long-range capital improvement plans to address their projected needs. Situations where capital outlays are not being made on a consistent basis might indicate the lack of a capital improvement plan. For further information or assistance, please contact George Harris at (919)

7 Financial Results and Key Ratios of Municipal Electric Systems Table A Financial Results As a % of Total Electric Fund Operating Revenues Key Ratios Total Electric Other Net Inc Days Days Fiscal Operating Power Operating Operating Transfers Before Quick Coverage Sales in Cash Unit Year Revenues Purchases Expenses Margin Out(In) Cap Contr Ratio Ratio Receivables on Hand N.C. Eastern Municipal Power Agency Participants Apex ,739, ,781, ,727, (1.5) ,854, Ayden ,942, (1.4) 3.4 (4.7) ,817, (2.5) ,176, (2.6) ,234, (3.9) Belhaven ,631, (0.8) ,721, ,822, ,688, (0.7) Benson ,653, (2.7) 1.6 (4.2) ,382, ,232, (0.9) ,905, (3.0) 2.2 (4.8) Clayton ,936, (3.3) - (2.7) ,247, ,453, ,991, Edenton ,151, ,676, (1.8) 2.0 (1.4) ,682, ,498, (1.8) 1.4 (2.9) Elizabeth City ,959, (1.0) ,969, (1.2) ,092, (5.0) 5.2 (8.9) ,855, (1.3) Page 7

8 Financial Results and Key Ratios of Municipal Electric Systems Table A Financial Results As a % of Total Electric Fund Operating Revenues Key Ratios Total Electric Other Net Inc Days Days Fiscal Operating Power Operating Operating Transfers Before Quick Coverage Sales in Cash Unit Year Revenues Purchases Expenses Margin Out(In) Cap Contr Ratio Ratio Receivables on Hand N.C. Eastern Municipal Power Agency Participants (continued) Farmville ,040, ,207, (5.9) ,174, ,050, (0.6) 1.9 (3.8) Fremont ,652, (1.4) ,491, (1.5) 2.7 (3.4) ,428, (18.4) ,424, Greenville ,820, ,615, ,201, ,895, Hamilton , (9.9) - (7.8) , (3.6) - (0.8) , (1.4) , Hertford ,981, (7.0) - (7.8) ,791, ,697, (0.9) 3.1 (4.2) ,579, (1.0) 2.6 (4.5) Hobgood , , , , (0.3) Hookerton , (7.9) - (7.3) , (9.4) (2.9) (3.5) , (9.0) 5.8 (10.5) , (4.7) - (1.2) Kinston ,128, ,105, (0.9) ,817, (0.8) 1.1 (2.2) ,686, (0.8) Page 8

9 Financial Results and Key Ratios of Municipal Electric Systems Table A Financial Results As a % of Total Electric Fund Operating Revenues Key Ratios Total Electric Other Net Inc Days Days Fiscal Operating Power Operating Operating Transfers Before Quick Coverage Sales in Cash Unit Year Revenues Purchases Expenses Margin Out(In) Cap Contr Ratio Ratio Receivables on Hand N.C. Eastern Municipal Power Agency Participants (continued) La Grange ,839, ,294, ,160, ,083, Laurinburg ,758, (7.2) 3.9 (10.4) ,817, (3.5) 2.1 (2.7) ,985, ,446, Louisburg ,460, (6.0) 2.8 (7.5) ,546, (7.1) 3.4 (6.4) ,248, (2.4) 2.9 (2.4) ,964, (2.6) 3.0 (4.0) Lumberton ,512, ,411, (0.7) ,817, ,793, New Bern ,254, ,163, ,057, ,829, Pikeville ,063, (5.2) - (6.4) , , , Red Springs ,576, (8.6) - (7.0) ,331, (0.5) ,115, ,113, Robersonville ,866, (10.7) 3.7 (11.7) ,684, (8.5) 2.1 (5.9) ,575, (9.3) 0.2 (3.5) ,439, (6.8) 0.2 (3.4) Page 9

10 Financial Results and Key Ratios of Municipal Electric Systems Table A Financial Results As a % of Total Electric Fund Operating Revenues Key Ratios Total Electric Other Net Inc Days Days Fiscal Operating Power Operating Operating Transfers Before Quick Coverage Sales in Cash Unit Year Revenues Purchases Expenses Margin Out(In) Cap Contr Ratio Ratio Receivables on Hand N.C. Eastern Municipal Power Agency Participants (continued) Rocky Mount ,529, ,286, ,835, ,239, Scotland Neck ,674, ,357, (0.5) ,284, (2.8) 0.9 (1.6) ,200, (7.2) 1.1 (5.7) Selma ,246, (0.7) ,401, ,299, ,846, (7.8) Smithfield ,753, (0.9) ,200, (1.1) ,619, ,892, Southport ,415, (0.1) ,716, ,732, ,610, Tarboro ,862, (1.6) 3.3 (4.9) ,878, (3.1) 4.7 (7.5) ,015, (1.9) 0.5 (1.9) ,310, (1.6) 4.6 (6.0) Wake Forest ,601, ,827, ,348, (1.0) - (0.8) ,819, (3.0) 1.6 (4.0) Washington ,335, ,185, ,988, ,079, (0.2) (3.8) Page 10

11 Financial Results and Key Ratios of Municipal Electric Systems Table A Financial Results As a % of Total Electric Fund Operating Revenues Key Ratios Total Electric Other Net Inc Days Days Fiscal Operating Power Operating Operating Transfers Before Quick Coverage Sales in Cash Unit Year Revenues Purchases Expenses Margin Out(In) Cap Contr Ratio Ratio Receivables on Hand N.C. Eastern Municipal Power Agency Participants (continued) Wilson ,457, ,908, ,753, (4.6) ,720, (2.0) 1.7 (3.4) N.C. Municipal Power Agency Number 1 Participants Albemarle ,667, ,897, ,027, ,610, (0.3) 3.6 (3.2) Bostic , , (0.7) , , Cherryville ,777, (1.3) 5.4 (6.8) ,931, (0.6) ,523, ,459, (0.7) Cornelius ,998, ,753, ,050, ,760, Drexel ,882, (6.4) - (4.2) ,007, ,889, ,860, (3.3) Gastonia ,915, ,204, ,651, ,871, (1.0) Page 11

12 Financial Results and Key Ratios of Municipal Electric Systems Table A Financial Results As a % of Total Electric Fund Operating Revenues Key Ratios Total Electric Other Net Inc Days Days Fiscal Operating Power Operating Operating Transfers Before Quick Coverage Sales in Cash Unit Year Revenues Purchases Expenses Margin Out(In) Cap Contr Ratio Ratio Receivables on Hand N.C. Municipal Power Agency Number 1 Participants (continued) Granite Falls ,185, ,986, (4.2) - (4.1) ,613, ,267, (0.6) - (0.3) High Point ,515, (3.9) ,806, ,956, (3.7) ,650, (3.2) 0.6 (2.8) Huntersville ,427, ,308, ,355, ,140, Landis ,959, ,796, ,371, (0.2) ,242, (1.5) 7.4 (8.6) Lexington ,552, (1.5) ,229, (4.2) ,010, ,646, (0.9) Lincolnton ,197, (6.9) 0.4 (6.0) ,226, (2.5) ,041, (0.2) ,817, (1.1) Maiden ,443, (6.3) 0.5 (6.6) ,104, ,868, ,587, (3.0) - (2.8) Monroe ,925, (0.6) 6.4 (4.2) ,050, ,853, ,118, (1.4) Page 12

13 Financial Results and Key Ratios of Municipal Electric Systems Table A Financial Results As a % of Total Electric Fund Operating Revenues Key Ratios Total Electric Other Net Inc Days Days Fiscal Operating Power Operating Operating Transfers Before Quick Coverage Sales in Cash Unit Year Revenues Purchases Expenses Margin Out(In) Cap Contr Ratio Ratio Receivables on Hand N.C. Municipal Power Agency Number 1 Participants (continued) Morganton ,925, (12.0) 2.1 (13.5) ,422, (13.1) 3.0 (14.1) ,094, (9.3) 4.0 (11.1) ,116, (6.9) 3.1 (6.9) Newton ,872, ,395, (3.4) ,097, (2.9) - (0.4) ,669, (7.1) 1.4 (6.3) Pineville ,920, ,233, ,543, ,390, Shelby ,397, ,333, ,906, ,529, (4.8) Statesville ,661, (1.3) 0.7 (0.7) ,804, ,425, ,434, Other Units with Electric Systems Black Creek ,411, ,277, ,232, ,123, Concord ,902, (0.1) ,920, (0.3) ,784, ,127, Page 13

14 Financial Results and Key Ratios of Municipal Electric Systems Table A Financial Results As a % of Total Electric Fund Operating Revenues Key Ratios Total Electric Other Net Inc Days Days Fiscal Operating Power Operating Operating Transfers Before Quick Coverage Sales in Cash Unit Year Revenues Purchases Expenses Margin Out(In) Cap Contr Ratio Ratio Receivables on Hand Other Units with Electric Systems (continued) Dallas ,668, ,029, ,661, ,476, Enfield ,849, (2.5) ,785, ,401, ,339, Fayetteville ,451, ,899, ,647, ,773, Forest City ,884, ,251, ,782, (0.6) ,302, Fountain , , , , Highlands ,225, (10.5) ,226, ,150, ,105, (23.2) Kings Mountain ,633, ,468, ,091, ,719, (0.5) Lucama ,063, ,016, ,802, ,802, Page 14

15 Financial Results and Key Ratios of Municipal Electric Systems Table A Financial Results As a % of Total Electric Fund Operating Revenues Key Ratios Total Electric Other Net Inc Days Days Fiscal Operating Power Operating Operating Transfers Before Quick Coverage Sales in Cash Unit Year Revenues Purchases Expenses Margin Out(In) Cap Contr Ratio Ratio Receivables on Hand Other Units with Electric Systems (continued) Macclesfield , (5.5) - (2.0) , , , (6.0) Oak City , , , (2.5) , (4.5) 6.4 (6.7) Pinetops ,884, (0.5) ,307, ,159, ,042, Sharpsburg ,231, (8.4) 18.8 (27.7) ,915, ,744, (2.7) ,017, Stantonsburg ,265, (1.0) ,203, ,011, ,811, Walstonburg , , , (3.3) - (3.2) , (2.4) 6.8 (9.2) Waynesville ,340, ,676, ,310, ,036, Windsor ,076, ,846, ,479, ,121, (1.7) Page 15

16 Financial Results and Key Ratios of Municipal Electric Systems Table A Financial Results As a % of Total Electric Fund Operating Revenues Key Ratios Total Electric Other Net Inc Days Days Fiscal Operating Power Operating Operating Transfers Before Quick Coverage Sales in Cash Unit Year Revenues Purchases Expenses Margin Out(In) Cap Contr Ratio Ratio Receivables on Hand Other Units with Electric Systems (continued) Winterville ,782, ,088, ,645, (0.6) ,740, Page 16

17 Table A (cont.) Financial Results and Key Ratios of Municipal Electric Systems Additional information to Table A: Murphy Power Board is not included in Table A because its operations are separate from the Town of Murphy and are not included in the Town's financial statements. Statistics pertinent to this unit are as follows: As a % of Total Electric Fund Operating Revenues Key Ratios Total Electric Other Days Days Fiscal Operating Power Operating Operating Transfers Net Quick Coverage Sales in Cash Unit Year Revenues Purchases Expenses Margin Out(In) Income Ratio Ratio Receivables on Hand Murphy Power Board ,374, ,022, ,664, ,012, Page 17

18 Table A (cont.) Financial Results and Key Ratios of Municipal Electric Systems Statistical Analysis - NC Eastern Municipal Power Agency Financial Results Key Ratios As a % of Total Operating Revenues Total Electric Other Net Income Days Days Fiscal Operating Power Operating Operating Transfers Before Quick Coverage Sales in Cash Year Revenues Purchases Expenses Margin Out(In) Cap Contr Ratio Ratio Receivables on Hand Minimum 2009 $ 441, (10.7) - (11.7) , (9.4) (2.9) (7.5) , (9.3) (1.5) (18.4) , (7.2) (3.8) (7.8) Maximum ,820, ,615, ,201, ,895, Mean ,366, (1.3) ,671, ,937, ,737, Median ,091, (0.8) ,039, ,876, ,419, (0.4) Standard Deviation ,126, ,528, ,114, ,981, Note: Electric Power Purchases plus Other Operating Expenses plus Operating Margin do not necessarily sum to 100% because each entry is a separately calculated statistic. Page 18

19 Table A (cont.) Financial Results and Key Ratios of Municipal Electric Systems Statistical Analysis - NC Municipal Power Agency Number 1 Financial Results Key Ratios As a % of Total Operating Revenues Total Electric Other Net Income Days Days Fiscal Operating Power Operating Operating Transfers Before Quick Coverage Sales in Cash Year Revenues Purchases Expenses Margin Out(In) Cap Contr Ratio Ratio Receivables on Hand Minimum 2009 $ 356, (12.0) - (13.5) , (13.1) (3.4) (14.1) , (9.3) (3.7) (11.1) , (7.1) (1.4) (8.6) Maximum ,515, ,806, ,956, ,650, Mean ,030, (0.1) ,254, ,085, ,184, Median ,920, ,233, ,543, ,390, (0.7) Standard Deviation ,930, ,183, ,975, ,464, Note: Electric Power Purchases plus Other Operating Expenses plus Operating Margin do not necessarily sum to 100% because each entry is a separately calculated statistic. Page 19

20 Table A (cont.) Financial Results and Key Ratios of Municipal Electric Systems Statistical Analysis - Other Units With Electric Systems Financial Results Key Ratios As a % of Total Operating Revenues Total Electric Other Net Income Days Days Fiscal Operating Power Operating Operating Transfers Before Quick Coverage Sales in Cash Year Revenues Purchases Expenses Margin Out(In) Cap Contr Ratio Ratio Receivables on Hand Minimum 2009 $ 261, (8.4) - (27.7) , (0.3) , (3.3) (2.7) (3.2) , (4.5) - (23.2) Maximum ,451, ,899, ,647, ,773, Mean ,700, ,287, ,442, ,999, Median ,225, ,226, ,150, ,105, Standard Deviation ,670, ,187, ,414, ,430, Note: Electric Power Purchases plus Other Operating Expenses plus Operating Margin do not necessarily sum to 100% because each entry is a separately calculated statistic. Page 20

21 Table A (cont.) Financial Results and Key Ratios of Municipal Electric Systems Statistical Analysis Definitions: Minimum - The smallest value found within a set of numbers. Maximum - The largest value found within a set of numbers. Mean - The mean or average is a measure reflecting the center of a distribution of values. Median - The middle value of an ordered set of numbers. From the ordered set, an equal number of values will be above and below the middle value. If there is an even number of numbers in the set, then the median is an average of the two numbers in the middle. Standard Deviation - measures the degree to which individual values in a list vary from the mean (average). The lower the standard deviation, the less individual values vary from the mean, and the more reliable the mean. As a general rule, if the data are normally distributed, 68% of the values will be within one standard deviation of the mean and 95% of the values will be within two standard deviations of the mean. The standard deviation can be particularly useful in identifying "outliers," i.e., values that are unusually high or low. Page 21

22 Key to Financial Statistics and Ratios Table A (cont.) Financial Results - These statistics were compiled by the staff of the Local Government Commission from the unit s audited financial statements. Total Operating Revenues Charges for services plus other operating revenues. Electric Power Purchases Wholesale cost of power purchased from the power agency as a percentage of total operating revenues. Other Operating Expenses Total operating expenses less electric power purchases as a percentage of total operating revenues. NOTE: Other operating expenses do not include interest expense or capital outlay. Interest expense is reported as a non-operating expense, and capital outlay is not an expense but is reported on the balance sheet as part of fixed assets. Operating Margin Total operating revenues less total operating expenses as a percentage of total operating revenues. Transfers Out (In) Total transfers out less total transfers in as a percentage of total operating revenues. Note: Negative amounts indicate transfers from other funds to the Electric Fund. Net Income Total operating revenues plus total nonoperating revenues less total operating expenses, total non-operating expenses, and transfers to (from) other funds as a percentage of total operating revenues. The income shown here is before capital contributions Page 22